Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Investor Presentation (May 2021)
45 slides from Midland States Bancorp's investor presentation, May 2021
Slide 1: Midland States Bancorp, Inc. Investor Presentation May 2021
Midland States Bancorp, Inc. NASDAQ: MSBI Investor Presentation May 2021 1
Slide 2: Forward-Looking Statements
Forward‐Looking Statements. This presentation may contain forward‐looking statements within the meaning of the federal securities laws. Forward‐looking statements expressing management’s current expectations, forecasts of future events or long‐term goals may be based upon beliefs, expectations and a
Slide 3: Company Snapshot
Company Snapshot $6.88 billion asset community bank established in 1881 and headquartered in Effingham, Illinois 2nd largest Illinois-based community bank1 $3.56 billion Wealth Management business Diversified lender with national equipment financing and consumer loan origination platforms co
Slide 4: Financial Services & Banking Center Footprint
Financial Services & Banking Center Footprint 4
Slide 5: Investment Summary
Investment Summary Consistent track record of driving Proven track record of successful compelling shareholder returns acquisitions with a focus on enhancing through disciplined strategic shareholder value while building a expansion and earnings growth platform for scalability Organization‐wide focu
Slide 6: Business and Corporate Strategy
Business and Corporate Strategy Customer‐Centric Culture Accretive Acquisitions Drive organic growth by focusing on customer Maintain experienced acquisition team capable service and accountability to our clients and of identifying and executing transactions that colleagues; seek to develop bankers
Slide 7: Experienced Senior Management Team
Experienced Senior Management Team Jeffrey G. Ludwig | President and CEO of Midland States Bancorp Assumed Company CEO role in Jan. 2019 after serving as Bank CEO More than 10 years serving as CFO Joined Midland in 2006; 16+ years in banking industry Douglas J. Tucker | SVP, Corporate Counsel
Slide 8: Successful Acquisition History
Successful Acquisition History Midland States has completed 14 transactions since 2008, including FDIC-assisted, branch, whole bank, asset purchase and business line acquisitions, and a New York trust asset acquisition Demonstrated history of earnings expansion Deliberate diversification of ge
Slide 9: Successful Execution of Strategic Plan…
Successful Execution of Strategic Plan… Total Assets (at period‐end in Billions) CAGR: 18% $6.9 $6.9 $6.1 $5.6 $4.4 $3.2 $2.9 $2.7 $1.6 $1.6 $1.7 $1.5 $1.1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1Q21 Selected Acquisitions Selected Acquisitions: Total Assets at Time of Acquisitio
Slide 10: …Leads to Creation of Shareholder Value
…Leads to Creation of Shareholder Value 21 Consecutive Years of Dividend Increases Tangible Book Value Per Share(1) Dividends Declared Per Share (at period‐end) $19.98 $19.31 $1.12 $1.07 $18.64 $0.97 $17.31 $0.88 $17.16 $17.00 $0.80 $15.91 $0.72 $0.65 $15.20 $0.59 $14.34 $0.53 $13.82 $0.48 $13.68 $0
Slide 11: Strategic Initiatives Strengthening Franchise
Strategic Initiatives Strengthening Franchise Significant Corporate Actions Since Coming Public in 2016… Action Strategic Rationale Financial Impact 2016 1Q21 Three whole bank acquisitions • Low‐cost deposits Total Assets $3.2B $6.9B Scale Four Wealth Management acquisitions(1) • Recurring revenue A
Slide 12: Strategic Initiatives Strengthening Franchise
Strategic Initiatives Strengthening Franchise …Have Produced Improved Growth and Profitability Adjusted Pre‐Tax Pre‐Provision Earnings(1) Total Loans (in millions) (in millions, as of year‐end) $5,103 $108.9 $101.3 $4,401 $83.7 $4,138 $61.9 $50.1 $3,227 $2,320 2016 2017 2018 2019 2020 2016 2017 2018
Slide 13: 2020 Optimization and Efficiency Initiatives
2020 Optimization and Efficiency Initiatives FY 2021 Initiative Details Expected Financial Impact • Sale of origination platform to • Ongoing commercial FHA revenue of Dwight Capital $1.2 million for servicing • No significant gain on sale (reduced • $8-$9 million expense reduction Sale of Commercia
Slide 14: Foundational Technology Roadmap
Technology Roadmap Midland’s technology investments are enhancing efficiencies, improving client experience, and positively impacting retail deposit gathering and commercial/consumer loan production Consumer Small Business Commercial Wealth Near real time payments (Q1 2021) Consumer online loan Loan
Slide 15: Recent Financial Trends
15 Recent Financial Trends Midland [=] States Bancorp, Inc.
Slide 16: Overview of 1Q21
Overview of 1Q21 • Net income of $18.5 million, or $0.81 diluted EPS 1Q21 Earnings • Adjusted Pre-Tax, Pre-Provision (PTPP) Income(1) of $29.1 million • Efficiency ratio improves to 56.9% from 58.6% in 4Q20 Improving • Return on average shareholders’ equity of 12.04% Performance Metrics • Return on
Slide 17: Loan Portfolio
Loan Portfolio • Total loans decreased $192.5 million from prior quarter to $4.91 billion • Decline due to elevated payoffs/paydowns including lower line utilization by ag borrowers and continued runoff in residential real estate portfolio driven by refinancing activity • Average balances on commerc
Slide 18: Total Deposits
Total Deposits • Total deposits increased $239.5 million, or 4.7% from prior quarter, to $5.34 billion • Growth in deposits largely attributable to increase in demand deposits from commercial clients and retail deposits resulting from stimulus payments • $159 million of CDs maturing in 2Q21 with a w
Slide 19: Net Interest Income/Margin
Net Interest Income/Margin • Net interest income decreased 3.1% from the prior quarter due to lower accretion income and lower PPP income • Net interest margin, excluding accretion income, was unchanged from prior quarter as a favorable shift in the mix of earning assets and a reduction in the avera
Slide 20: Wealth Management
Wealth Management • During 1Q21, assets under administration increased $79.7 million, primarily due to market performance • Wealth Management revenue increased 1.1% from prior quarter, primarily due to higher assets under administration and seasonal impact of fees related to tax preparation Assets U
Slide 21: Noninterest Income
Noninterest Income • Noninterest income increased 3.3% from prior quarter • Impairment on commercial MSRs impacted noninterest income by $1.3 million and $2.3 million in 1Q21 and 4Q20, respectively • Excluding the impact of the impairment of commercial MSRs, noninterest income decreased primarily du
Slide 22: Noninterest Expense and Operating Efficiency
Noninterest Expense and Operating Efficiency Noninterest Expense and Efficiency Ratio (1) • Efficiency Ratio (1) was 56.9% in 1Q21 vs. 58.6% in 4Q20 (Noninterest expense in millions) • Adjustments to non-interest expense: ($ in millions) 1Q21 4Q20 Integration and $53.9 62.2% acquisition related ($0.
Slide 23: COVID-19 Response and Impact
COVID‐19 Response and Impact 23
Slide 24: Paycheck Protection Program Overview
Paycheck Protection Program Overview Paycheck Protection Program Paycheck Protection Program (as of 3/31/21) Loan Forgiveness Loans Outstanding $211.6 million As of 12/31/20 As of 3/31/21 Round 1 $132.2 million Round 2 $79.3 million Loans Submitted to SBA $155.6 million $196.5 million Total Fees Ear
Slide 25: Commercial Loans and Leases by Industry
Commercial Loans and Leases by Industry Industries as a percentage of Commercial, Other Services Wholesale Trade CRE and Equipment Finance Loans and Leases Health Care 3.3% 2.5% as of 3/31/21 3.7% RE / Rental & Leasing Trans. / Ground Passenger 19.5% 4.0% General Freight Trucking 4.6% Ag., Forestry,
Slide 26: Commercial Real Estate Portfolio by Collateral Type
Commercial Real Estate Portfolio by Collateral Type Collateral type as a percentage of the Industrial / Warehouse Commercial Real Estate and Construction 9.1% Office Portfolio as of 3/31/21 7.1% Hotel/Motel 9.3% Residential 1‐4 Family 5.1% Farmland 4.2% Multi‐Family 9.4% C‐Store / Gas Station 3.7% M
Slide 27: Loan Deferral Overview
Loan Deferral Overview Total Loan Deferrals Deferral Type (as of March 31, 2021) As of As of As of Sept. 30, 2020 Dec. 31, 2020 Mar. 31, 2021 Full Payment Deferral $131.9 million Total Loans Deferred $279.3 million $209.1 million $219.1 million Deferred Loans Making $87.2 million % of Total Loans 5.
Slide 28: Midland Equipment Finance Portfolio Overview
Midland Equipment Finance Portfolio Overview Portfolio Characteristics Total Deferred (as of 3/31/21) Loans and Leases Nationwide portfolio providing financing solutions As of As of As of to equipment vendors and end‐users 9/30/20 12/31/20 3/31/21 Total Outstanding $858.6 million Loans and Leases (1
Slide 29: Hotel/Motel Portfolio Overview
Hotel/Motel Portfolio Overview Portfolio Characteristics (CRE & C&I) (as of 3/31/21) Total Outstanding $167.0 million (3.4% of total loans) Number of Loans 46 Average Loan Size $3.6 million Largest Loan $11.3 million Average LTV 57% Total Deferred Loans as of 12/31/20 $82.6 million (45.8% of portfol
Slide 30: GreenSky Consumer Loan Portfolio Overview
GreenSky Consumer Loan Portfolio Overview Portfolio Characteristics Prime Credit (as of 3/31/21) Average FICO score of 771 $754.6 million Total Outstanding (15.4% of total loans) No losses to MSBI in 10 year history of portfolio Number of Loans 351,417 Portfolio can be sold to provide liquidit
Slide 31: Asset Quality
Asset Quality • Nonperforming loans declined $1.2 million due to resolution of long-term problem loans • NPLs/total loans increased to 1.08% from 1.06% at the end of the prior quarter due to the decline in total loan balances • Net charge-offs of $1.7 million, or 0.14% of average loans • Provision f
Slide 32: Changes in Allowance for Credit Losses
Changes in Allowance for Credit Losses ($ in thousands) Specific Portfolio Economic Reserves Changes Factors New loans Changes in credit Changes to macro- quality including economic variables risk downgrades and forecasts Changes to specific and deferrals Changes to other reserves Change
Slide 33: ACL by Portfolio
ACL by Portfolio ($ in thousands) Total Loans at % of Total Loans at % of Portfolio ACL ACL 3/31/21 Total Loans 12/31/20 Total Loans Commercial $ 808,262 $ 8,214 1.02% $ 937,382 $ 8,537 0.90% Warehouse Lines 205,115 ‐ 0.00% 273,298 ‐ 0.00% Commercial Other 766,632 9,125 1.19% 748,193 11,314 1.51% Eq
Slide 34: Capital and Liquidity Overview
Capital and Liquidity Overview Capital Ratios Liquidity Sources (as of 3/31/21) (as of 3/31/21) 15.00% ($ in millions) 13.73% Cash and Cash Equivalents $ 631.2 Unpledged Securities 252.6 12.18% FHLB Committed Liquidity 645.2 11.15% 11.15% FRB Discount Window Availability 57.3 9.62% Primary Liquidity
Slide 35: Outlook
35 Outlook Midland [=] States Bancorp, Inc.
Slide 36: 2021 Outlook and Priorities
2021 Outlook and Priorities • Maintain strong capital and liquidity positions to continue supporting clients and communities through the duration of the COVID-19 pandemic • Targeting low- to mid-single-digit loan growth (excluding PPP loans) resulting from continued growth in equipment finance, comm
Slide 37: Long-Term Formula for Enhancing Shareholder Value
Long‐Term Formula for Enhancing Shareholder Value Disciplined Balance Sheet Growth Improving Operating Efficiencies Stable Sources of Recurring Income Accretive M&A Transactions Earnings Growth, Improving Returns and Enhanced Franchise Value 37
Slide 38: Appendix
38 APPENDIX Midland [=] States Bancorp, Inc.
Slide 39: ESG: A Framework for Sustainability
Financial Education ESG: A Framework for Sustainability • Since 2015 we have held more than 240 financial literacy seminars in LMI/minority neighborhoods in our footprint. Environmental Facilities CRA, Community Development and Financial Inclusion • Our Corporate HQ, built in 2011, is LEED (Silver)
Slide 40: Appendix: Reconciliation of TBV Per Share
Appendix: Reconciliation of TBV Per Share As of December 31, As of March 31, (do llars in tho usands, except per share data) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Shareholders' Equity to Tangible Common Equity—as converted: Total shareholders' equity—GAAP $ 109,208 $ 126,953 $
Slide 41: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings
MIDLAND S TATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEAS URES (unaudited) Adjusted Earnings Reconciliation For the Years Ended December 31, (dollars in thousands) 2020 2019 2018 2017 2016 Income before income taxes - GAAP $ 32,014 72,471 50,805 26,471 50,431 Adjustments to noninteres
Slide 42: Reconciliations of Non-GAAP Financial Measures: Efficiency Ratio
MIDLAND S TATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEAS URES (unaudited) Efficiency Ratio Reconcilation For the Years Ended December 31, (dollars in thousands) 2020 2019 2018 2017 2016 Noninterest expense $ 184,010 $ 175,641 $ 191,643 $ 152,997 $ 121,289 Adjustments to noninterest e
Slide 43: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For the Quarter Ended March 31, December 31, September 30, June 30, March 31, (dollars in thousands, except per share data) 2021 2020 2020 2020 2020 Income before income taxes - G
Slide 44: Reconciliations of Non-GAAP Financial Measures: Efficiency Ratio
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) Efficiency Ratio Reconciliation For the Quarter Ended March 31, December 31, September 30, June 30, March 31, (dollars in thousands) 2021 2020 2020 2020 2020 Noninterest expense - GAAP $ 39,079 $ 47,0
Slide 45: Reconciliations of Non-GAAP Financial Measures: Tangible Common Equity
MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share As of March 31, December 31, September 30, June 30, March 31, (dollars in thousands, except per share data) 2021 2020
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